Use the Information for the Question(s)below

question 38

Multiple Choice

Use the information for the question(s) below.
Tom's portfolio consists solely of an investment in Merck stock.Merck has an expected return of 13% and a volatility of 25%.The market portfolio has an expected return of 12% and a volatility of 18%.The risk-free rate is 4%.Assume that the CAPM assumptions hold in the market.
-Assuming that Tom wants to maintain the current volatility of his portfolio,then the amount that Tom should invest in the market portfolio to maximize his expected return is closest to:

• A)72%
• B)92%
• C)110%
• D)140%

---

Definitions:

Acculturation

The process through which individuals or groups from one cultural background adopt the traits of another, often dominant, culture.

Attitudinal Identification

The psychological process by which a person aligns their attitudes, beliefs, or behaviors with those of a group or society.

Subliminal Messages

Messages transmitted in a way that is designed to pass below the normal limits of perception, often used in advertising to influence consumer behavior unconsciously.

Selective Perception

The process by which individuals perceive what they want to in media messages while ignoring opposing viewpoints, often based on their background, experiences, and biases.